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Savings: How much is needed?

I am not expert on retirement planning and have many years to go before readers of this blog would need to worry about "withdrawal" rate. However it's never too early to plan. Thanks to one of the friend, I came across few articles on "withdrawal" rate and how much one needs to save to maintain decent living standards.
Here are few assumptions to make:

  • "Safe or risk-free" rate of return is about 3% (equivalent of coupon on 30 year US treasury)
  • Protect "principal" as many years as possible
  • Mortgage is paid off
  • College expenses are over (and kids have settled down)
  • No major health care expenses
With these assumptions, one could assume that $100K per year income is sufficient to live in areas like Bay Area (which is one of the costliest but most cosmopolitan areas to live in USA).  Assuming about $25K in social security benefits, one would need to create $75K per year in additional income from retirement savings. That would mean one needs close to $2.5M in savings to maintain the "principal" and still maintain a decent life-style. Of course many of these assumptions would change if one moves to less costly area or assumptions change.


If you are interested further, read on following.
https://www.thebalance.com/how-much-can-you-withdraw-from-your-retirement-portfolio-453997
https://www.fool.com/retirement/2017/07/02/3-serious-problems-with-the-4-retirement-rule.aspx
http://money.cnn.com/2017/04/12/retirement/4-percent-rule/index.html
https://www.financialsamurai.com/the-ideal-withdrawal-rate-for-retirement-doesnt-touch-principal/
Well if these are the savings one need, it's good to know now! As I mentioned, this is just my interpretation of various articles. One should consult proper financial advisor to plan!

Coming to Trump drama, there is never a boring week. Only President Trump has skills to antagonize NBA, NFL players, Obamacare supporters (including some GOP senators) and North Korean dictator Kim in same week. Despite all this drama, I am surprised that stock markets are making new highs every week. So are there any good "picks" in these frothy markets? Given that oil market is holding up well, I am still staying with my hypothesis on "energizing" portfolio.

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